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According to the instructions that came with the one I purchased, they go on over the varnish and weren't varnished over. So if you are inquiring for that beautiful squared-stern, sponson covered boat that you posted a picture of yesterday it's not too late!

Shari,
The one in the photos is long gone and being enjoyed by third and forth generations. It had a replica Old Town Canoe decal on it. I suppose it was appropriate because the model name for that one was “Old Town Square Stern Paddling Canoe”.
The boat in question in my post here is a Old Town Square Stern. Sorta misleading because it is a full blown 16’ row boat and not like yours or the one I restored previously.